CHICAGO -- Standard & Poor's Corp. upgraded $422 million of Utah Housing Finance Agency debt on Friday to AA from A-minus and A, based on the agency's new blended ratings approach for providers of credit support for housing issues.

Wendy Dolber, a director at the agency, said the Utah housing debt was the first of three states to be upgraded and removed from CreditWatch, where it had been placed with positive implications on June 29.

At that time, Standard & Poor's placed about $1 billion of state housing debt from New Mexico, New York, and Utah on CreditWatch for an assessment of overall credit quality under the new rating criteria.

The Utah housing debt had been downgraded to A-minus and A on Feb. 3 due to the downgrades of Citibank and Citicorp, which provide investment agreements for the various funds of the housing agency.

The ratings upgrade back to the AA level was due, Standard & Poor's said, to "the strong performance" of Federal Housing Administration-insured and Veterans Administration-guaranteed loans, cash flows, "strong asset/liability parity ratios," sufficiency of reserves with a backup moral obligation pledge from the state of Utah, the credit quality of investments, and "strong agency management and financial resources."

Under the agency's blended approach, ratings are based on the quality of the entire pool of assets, not on the rating of the lowest-rated provider.

This change reflects the agency's recognition of the additional enhancement some state [housing agencies] bring to their rated debt through proactive portfolio management and financial resources, according to a report on the criteria.

Ms. Dolber said the housing debt from New Mexico and New York was still under review.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.